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Transcript
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON :
For sale by the Superintendent of Documents, U.S. Government Printing OfficeInternet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800
Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001
89–810 PDF 2015
U.S. COPYRIGHT OFFICE
HEARING BEFORE THE
SUBCOMMITTEE ON
COURTS, INTELLECTUAL PROPERTY,
AND THE INTERNET OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
SEPTEMBER 18, 2014
Serial No. 113–116
Printed for the use of the Committee on the Judiciary
(
Available via the World Wide Web: http://judiciary.house.gov
(II)
COMMITTEE ON THE JUDICIARY
BOB GOODLATTE, Virginia, Chairman F. JAMES SENSENBRENNER, JR.,
Wisconsin HOWARD COBLE, North Carolina LAMAR SMITH, Texas STEVE CHABOT, Ohio SPENCER BACHUS, Alabama DARRELL E. ISSA, California J. RANDY FORBES, Virginia STEVE KING, Iowa TRENT FRANKS, Arizona LOUIE GOHMERT, Texas JIM JORDAN, Ohio TED POE, Texas JASON CHAFFETZ, Utah TOM MARINO, Pennsylvania TREY GOWDY, South Carolina RAUL LABRADOR, Idaho BLAKE FARENTHOLD, Texas GEORGE HOLDING, North Carolina DOUG COLLINS, Georgia RON DeSANTIS, Florida JASON T. SMITH, Missouri [Vacant]
JOHN CONYERS, JR., Michigan JERROLD NADLER, New York ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia ZOE LOFGREN, California SHEILA JACKSON LEE, Texas STEVE COHEN, Tennessee HENRY C. ‘‘HANK’’ JOHNSON, JR.,
Georgia PEDRO R. PIERLUISI, Puerto Rico JUDY CHU, California TED DEUTCH, Florida LUIS V. GUTIERREZ, Illinois KAREN BASS, California CEDRIC RICHMOND, Louisiana SUZAN DelBENE, Washington JOE GARCIA, Florida HAKEEM JEFFRIES, New York DAVID N. CICILLINE, Rhode Island
SHELLEY HUSBAND, Chief of Staff & General Counsel PERRY APELBAUM, Minority Staff Director & Chief Counsel
SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET
HOWARD COBLE, North Carolina, Chairman TOM MARINO, Pennsylvania, Vice-Chairman
F. JAMES SENSENBRENNER, JR., Wisconsin
LAMAR SMITH, Texas STEVE CHABOT, Ohio DARRELL E. ISSA, California TED POE, Texas JASON CHAFFETZ, Utah BLAKE FARENTHOLD, Texas GEORGE HOLDING, North Carolina DOUG COLLINS, Georgia RON DeSANTIS, Florida JASON T. SMITH, Missouri [Vacant]
JERROLD NADLER, New York JOHN CONYERS, JR., Michigan JUDY CHU, California TED DEUTCH, Florida KAREN BASS, California CEDRIC RICHMOND, Louisiana SUZAN DelBENE, Washington HAKEEM JEFFRIES, New York DAVID N. CICILLINE, Rhode Island ZOE LOFGREN, California SHEILA JACKSON LEE, Texas STEVE COHEN, Tennessee
JOE KEELEY, Chief Counsel HEATHER SAWYER, Minority Counsel
(III)
C O N T E N T S
SEPTEMBER 18, 2014
Page
OPENING STATEMENTS
The Honorable Howard Coble, a Representative in Congress from the State of North Carolina, and Chairman, Subcommittee on Courts, Intellectual Property, and the Internet .................................................................................. 1
The Honorable John Conyers, Jr., a Representative in Congress from the State of Michigan, Ranking Member, Committee on the Judiciary, and Member, Subcommittee on Courts, Intellectual Property, and the Internet .. 25
The Honorable Jerrold Nadler, a Representative in Congress from the State of New York, and Ranking Member, Subcommittee on Courts, Intellectual Property, and the Internet .................................................................................. 26
WITNESS
The Honorable Maria A. Pallante, Register of Copyrights and Director U.S. Copyright Office Oral Testimony ..................................................................................................... 28 Prepared Statement ............................................................................................. 30
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Material submitted by the Honorable Howard Coble, a Representative in Congress from the State of North Carolina, and Chairman, Subcommittee on Courts, Intellectual Property, and the Internet ........................................... 4
APPENDIX
MATERIAL SUBMITTED FOR THE HEARING RECORD
Material submitted by the Honorable Howard Coble, a Representative in Congress from the State of North Carolina, and Chairman, Subcommittee on Courts, Intellectual Property, and the Internet ........................................... 60
Prepared Statement of the Honorable Bob Goodlatte, a Representative in Congress from the State of Virginia, and Chairman, Committee on the Judiciary ............................................................................................................... 85
Prepared Statement of Mary Rasenberger, Executive Director, The Authors Guild, Inc. ............................................................................................................. 88
Prepared Statement of Keith M. Kupferschmid, General Counsel and Senior Vice President, Intellectual Property, Software & Information Industry As-sociation (SIIA) ..................................................................................................... 102
Letter from the Intellectual Property Owners Association (IPO) ........................ 109 Prepared Statement of Rick Carnes, President, Songwriters Guild of America 116 Prepared Statement of the Motion Picture Association of America, Inc.
SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET
COMMITTEE ON THE JUDICIARY
Washington, DC.
The Subcommittee met, pursuant to call, at 2:14 p.m., in room 2141, Rayburn Office Building, the Honorable Howard Coble, (Chairman of the Subcommittee) presiding.
Staff Present: (Majority) David Whitney, Counsel; Olivia Lee, Clerk; (Minority), Norberto Salinas, Counsel; and Jason Everett, Counsel.
Mr. COBLE. The Subcommittee on Courts, Intellectual Property, and the Internet will come to order.
Without objection, the Chair is authorized to declare recesses of the Subcommittee at any time.
We welcome our witness today, and we will introduce her at a subsequent time, imminently.
With that in mind, let me give my opening statement. Within Congress, the Judiciary Committee is responsible—strike
that. I want to apologize to all of you for our belated commencement
time. We had votes on the floor. That is why we are running about 10 minutes late.
Within Congress, the Judiciary Committee is responsible for overseeing and legislating on matters that derive from or are sub-stantially affected by the Constitution’s grant of authority under Article 1, Section 8, Intellectual Property Clause. In the context of today’s hearing, there are two points I want to make regarding this authority.
First, the Constitution’s drafters didn’t merely give Congress the authority to grant exclusive rights to authors and inventors; they gave the Congress the responsibility to execute it by literally pre-scribing the means of securing these exclusive rights.
Secondly, since the 19th century, the Congress has sought to ad-minister and secure these rights through a design that has largely
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been left unchanged, a statutorily created Copyright Office housed in the Library of Congress.
Today’s hearing will focus on the operations of the U.S. Copy-right Office. In doing so, we will not merely gaze backwards to as-sess how the Office has constructed its business in recent years. We will look forward and begin to examine the more difficult and substantial questions of whether we are equipping the Office to succeed and ask what steps we need to take to position it to pro-mote the interests of authors and the public and perform its statu-tory responsibilities in the 21st century.
From time to time, we need to step back and see not only if we should make changes to substantive law but also whether we should continue to do things as we have done them for years. On the substantive side, the Committee is engaged in an ongoing and historic comprehensive review of copyright law. On the process and operations side, we need to begin a complementary effort to ensure that we are considering how to administer the law and whether we are furthering its constitutional and statutory objectives on a sub-stantial basis.
Over the years, I think the location of the Office in the Library of Congress served largely to serve the objectives and interests of both organizations and the American people as well, but we live in a dynamic and increasingly digital environment and it is clear that the Office’s structure was designed for an analog era or an analog age. Today, the Office serves as a repository for vital information that helps to promote and advance the interest of free expression and has an epicenter of commercial activity that educates and en-tertains not only Americans but citizens throughout the world. This will only increase tomorrow.
Congress has looked to alternatives in the past. In the mid- 1990’s, we contemplated reorganizing the PTO as a government corporation and one of the proposals reviewed would have been to combine the Copyright Office with the PTO. We subsequently adopted reforms to the PTO organization but put aside the ques-tion of whether the Copyright Office and, more importantly, the principles we seek to advance through the institution of the Office would be of benefit therefore.
The Subcommittee has been concerned about the Office’s ability to perform its functions and duties for some time. It is an open question whether the Office has the support it needs from the Li-brary, and I don’t mean to be in any way critical of the Library. But nonetheless, I think that is the case. Its operations and func-tion are 24/7 as a marketplace requires and the American people deserve.
This discussion needs to be a public one, and it needs to be ap-proached with an open mind, with the clear objective of building a 21st century digital Copyright Office.
We look forward to receiving the testimony of Ms. Pallante, the United States Register of Copyrights. But before she begins I want you to know that she recently delivered an important address enti-tled ‘‘The Next Generation of Copyright Office: What It Means and Why It Matters.’’ In those remarks, she reported on the progress the Office has made in modernizing its operations under existing authorities and made recommendations for needed improvement.
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Without objection, I ask that we include a copy of that speech in the record.
[The information referred to follows:]
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Mr. COBLE. I am now pleased to recognize—Mr. Nadler is not here—Mr. Conyers. I will recognize the gentleman, the distin-guished gentleman from Michigan, former Chairman of the full Committee, Mr. Conyers, for his opening statement.
Mr. CONYERS. Thank you, Chairman Coble. I am delighted to join you in welcoming the Register of Copyrights. I would like to merely observe that this Office plays a critical role in promoting and pro-tecting the integrity and vitality of our Nation’s copyright system. And to that end, today’s hearing should focus on several factors.
As a fundamental matter, the Copyright Office must be on the forefront of our fight against piracy. As I have stated many times, copyright is critical to job development and the overall health of our Nation’s economy. An intellectual property system that protects copyrights, incentivizes their owners to continue to innovate—that, of course, creates jobs and strengthens the Nation’s economy.
Unfortunately, piracy is devastating to our economy and harms our creators and innovators. It is directly responsible for the loss of billions of dollars and millions of jobs. The Copyright Office helps to combat piracy by educating the public and Congress on the seriousness of piracy and how to prevent it, and it works with other agencies to strengthen copyright enforcement.
In addition, the Office, through its International Copyright Insti-tute, helps deter piracy of copyrighted works by encouraging the development of effective intellectual property laws and enforcement abroad. Accordingly, we should encourage the Office to further ex-plore ways to strengthen its efforts to maintain a robust copyright system and combat piracy.
A factor integral to the success of the copyright system is for the Copyright Office to upgrade to the digital age and become more user-friendly, and accordingly we must support the Office’s efforts to modernize. For example, the Office’s recordation system con-tinues to be a cumbersome and costly process that requires manual examination and data entry. The functionality of the Office’s data-bases and the usability of the Office’s website frankly need im-provements. The security of deposited digital works should be en-hanced. The copyright community needs a system which provides a more usable public record of copyrighted material.
The Copyright Office is aware of the need to modernize, and we must help it do so. And most importantly, a strong copyright sys-tem requires that we fully fund the Copyright Office, and in that regard the Chairman of this Committee, Bob Goodlatte, joins me in supporting that idea.
The Office performs several significant roles in our copyright sys-tem, including examining and registering copyright claims, record-ing copyright documents, and administering statutory licenses. Yet, since 2010, Congress has cut the Copyright Office’s budget 7.2 per-cent while continuing to ask the Office to do even more. And as a result, the Office has had to rely on its small reserve fund of cus-tomer fees to barely meet operating expenses. This reduces any op-erating cushion the Office could otherwise use for long-term plan-ning.
Further, the recent sequester further compounded the resource problems at the Copyright Office. It limited the Office’s ability to hire staff to fulfill its many duties. In fact, just considering the reg-
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istration program, it currently has 48 vacancies out of 180 staff slots, according to our research.
Unless Congress can’t agree on a Federal appropriations plan next year, the Office will face another mandatory sequester in Fis-cal Year 2016. Fully funding the Copyright Office will help it carry out the increasing volume and complex work that we expect it to perform. This, in turn, will make our copyright system become more effective and efficient.
And so I thank Chairman Coble for holding today’s hearing, and I look forward to hearing from the Register of Copyrights herself. Thank you, Mr. Chairman.
Mr. COBLE. I thank the gentleman from Michigan. The Chair now recognizes the distinguished gentleman from New
York, the Ranking Member of the Subcommittee, Mr. Nadler, for his opening statement.
Mr. NADLER. Thank you, Mr. Chairman, for holding this over-sight hearing with respect to the U.S. Copyright Office.
I would like to thank the Register of Copyrights, Maria Pallante, for appearing again before the Subcommittee, and thank you and your staff for serving as a resource during the Committee’s com-prehensive copyright review. I look forward to hearing how the Copyright Office can continue to provide valuable services for both copyright owners and users, which is particularly important as in-tellectual property and copyright matters constitute an increasingly significant segment of our economy and culture.
Many people might be surprised to learn just how many func-tions the Copyright Office performs. The Copyright Office registers copyright claims, records documents, administers several statutory licenses, performs regulatory responsibilities, and provides informa-tion to the public. In addition to these administrative functions, the Copyright Office provides expert advice to Congress, conducts stud-ies, and makes policy recommendations.
Over the years, the Copyright Office has given Congress a num-ber of studies on a variety of topics, including orphan works, li-brary exceptions, statutory licensing reform, Federalization of pre- ’72 sound recordings, and master digitalization of books.
The recent and ongoing reports and studies have been extremely helpful to Members of Congress and their staffs. I am particularly thankful for the updated report examining the issue surrounding visual artists and resale royalties in the United States that was re-leased in December of last year, and I look forward to reviewing the music licensing report that will be released in the near future.
The future success of the Copyright Office will largely depend on how technology at the Copyright Office is connected and managed through the Library’s technology enterprises. For that reason, I am interested in hearing about how and if the Copyright Office’s tech-nical capacities are fully able to accommodate the long-term goals of the Office.
Electronic submission standards for copyright documents will also continue to grow in importance. The Copyright Office should continue to make recordation inexpensive and workable for copy-right transactions.
The Copyright Office has been able to perform their numerous responsibilities with very limited funding. In Fiscal Year 2014, the
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Office had an overall budget of just $45 million, with about $28 million of that coming from fees paid by copyright owners for reg-istration, recordation and other public services, and $17 million from appropriated funds.
The Copyright Office continues to face staffing shortages, budget reductions and workloads, and as the distinguished Ranking Mem-ber of the Committee mentioned, the sequester. With these chal-lenges, the Copyright Office may need to consider creating new po-sitions to support the complexity of statutory technology and regu-latory responsibilities.
Copyright owners depend now, more than ever, on searchability, reliability, and security of Copyright Office records. Copyright own-ers want to know that their digital files will remain secure as dig-ital works become used more often. The Copyright Office and the Library need to maintain secure repositories so that users can con-tinue to have confidence in participation in the copyright system.
I know this is a goal that is shared by Ms. Pallante and her lead-ership team, who have taken steps to improve the core services and technical capacity at the Copyright Office. I look forward to hearing from Ms. Pallante today about how we can continue to improve the Copyright Office and ensure that it provides state-of-the-art serv-ices in the years to come.
I thank you, and I yield back the balance of my time. Mr. COBLE. I thank the gentleman. We have been joined by the gentle lady from California, the
gentle lady from Washington, I think, Washington or California, the Evergreen State, and the distinguished gentlemen from Penn-sylvania, North Carolina, and Georgia.
As I said earlier, we are honored to have the United States Reg-ister of Copyrights as our witness today. Maria A. Pallante is the 12th appointed Register of Copyrights and Director of the United States Copyright Office. In her position, Ms. Pallante directs the legal policy and business activities of the Office. The position of the Register of Copyrights is a unique, historic, and vitally important one, and Ms. Pallante assumed control of the Office at an especially challenging and momentous time. Among other key duties, the Register serves as the principal adviser to Congress on matters of copyright law and policy.
Ms. Pallante had to spend much of her career in the Office where she previously served as the Associate Register for Policy and International Affairs, Deputy General Counsel, and Policy Advisor. She also served as a senior advisor to the Librarian, Dr. James Billington, immediately prior to being appointed Register. She spent nearly a decade as Intellectual Property Counsel and Direc-tor of Licenses for the Guggenheim Museums in New York. She earned her J.D. degree from the George Washington University School of Law and her Bachelor’s degree from Misericordia Univer-sity.
Madam Register, it is good to have you with us. We try to comply with the 5-minute rule, if possible. When you
see the green light turn to amber, the ice on which you are skating is becoming thin, but you won’t be penalized if you violate it. But try to stay within the 5 minutes, if you can.
We are pleased to have you with us today.
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TESTIMONY OF THE HONORABLE MARIA A. PALLANTE, REG-ISTER OF COPYRIGHTS AND DIRECTOR U.S. COPYRIGHT OF-FICE Ms. PALLANTE. Chairman Coble, Ranking Member Nadler, Mem-
bers of the Subcommittee, I would like to thank you as well as Chairman Goodlatte and Ranking Member Conyers of the full Committee for inviting me to testify today.
The Copyright Office is a significant Federal institution. We interact with and provide services to businesses of all sizes, from small proprietors to multinational corporations, many of which are in a state of constant growth and innovation. Never has the deliv-ery of creative content been faster, more interactive, or more global than it is now.
In turn, it has become clear to me that the Copyright Office must also become more forward-thinking than it is; that is, more flexible and more interoperable with the marketplace that we serve.
In the past couple of years, I have focused the Office on two pri-mary goals: first, carrying out the day-to-day workload of admin-istering the law; and second, engaging in discussions with the pub-lic about future strategies and direction for the Office. Mr. Chair-man, we have been very transparent about this work. We have published numerous public inquiries, we have solicited written comments, we have conducted numerous roundtables, and we have participated in dozens of meetings at bar associations, conferences and seminars.
In 2011, we published and have since followed a multi-year work plan. This included a series of special projects designed to inform the priorities and future path of the Office. Notably, this occurred alongside budget cuts, further challenging us to not only think big but to think creatively about our operations. Here are some of the highlights of what we have accomplished.
We analyzed and wrote the first revision in decades of the Com-pendium of U.S. Copyright Office Practices, which we released in draft form to the public last month. At 1,200 pages, the Compen-dium is replete with our core administrative practices and helpful examples for authors, artists, and other customers. It is the in-struction manual for our staff in the examination process, and it is a key legal source for the courts. We have received tremendously positive feedback regarding both the authoritative text and the clear presentation of the material.
I would like to underscore some of the groundwork that we have done in the area of technical upgrades, which was really a form of self-evaluation for the Office. Essentially, we conducted a public re-view of our relative strengths and weaknesses in providing serv-ices, with a focus on the user interface of our electronic systems; the quality of our public records; security issues; the usability of our website; industry standards, for example with respect to metadata, copy controls and private registries; and the overall cus-tomer experience of interacting with the Office.
We spent considerable time evaluating our recordation service, which Ranking Member Conyers has pointed out is still a paper- based process. Recordation is separate from registration. This is the process by which licensing information, security interests and other copyright documents are recorded with the Office on an ongo-
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ing basis. We need to transform it from a paper process to an inter-operable digital platform.
We are grateful to everyone who has participated in this work, including book publishers, public interest groups, technologists, the music and movie industries, photographers, authors’ groups, and others.
Turning to my final point, I want to discuss our budget, which in turn affects staffing and technology. As mentioned, we have a $45 million budget; about $28 million of that comes from fees. In May 2014, we implemented a new fee schedule following a 2-year public process, raising the general fee for registration from $35 to $55. We did retain a lower fee for certain small actors. This was the first time we have ever differentiated our fees, but there has been strong public support for the concept, and I think we probably have to do more of it in the future.
To be very clear, and notwithstanding the direction of our statu-tory mandate on fees, I should note that the Copyright Office fees do not recover the full cost of our services. This is because we share IT infrastructure with the Library of Congress and receive our IT support services from a central Library department.
If we want the public record to be better, we will need better re-sources. And if we want the resources to come primarily from fees, then we should expect that copyright owners will, in turn, want better systems and services than they have now. Moreover, under the current statutory language, we are limited to charging for the cost we incur for providing services. That is, our fee authority does not permit the Office to collect for capital improvements or other forms of investment above actual cost after the IT infrastructure that is subsidized by the Library. This equation may be something that Congress wants to visit.
In terms of staffing, I will just say the Copyright Office is small-er than it should be to carry out the volume and complexity of the work that we are charged with. Unfortunately, as the staff has been reduced, the work of the Office and the complexity of the copyright system have increased dramatically.
Chairman Coble, that concludes my statement, but I wonder if I might have a minute on a different point.
[The prepared statement of Ms. Pallante follows:]
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Mr. COBLE. Without objection. Ms. PALLANTE. Chairman Coble, I am aware that you have pre-
sided over copyright issues on this and former Committees for close to 3 decades, including as Chairman. As you prepare to retire, I am moved to say that today may well be the last time that a Register of Copyrights will appear before you. Therefore, on behalf of my-self, my predecessors, and the entire staff of the U.S. Copyright Of-fice, I wish to personally thank you for your dedication to our Na-tion’s copyright system and for your service to us. We will miss you tremendously, as will the rest of the copyright community. Thank you. [Applause.]
Mr. COBLE. Thank you. I appreciate that. [Applause.] Thank you. You all know how to make an old man feel good. I
thank you very much for that, for your generous words, Madam Register. I appreciate that. I appreciate the response from the audi-ence as well. It is good to have all of you with us today.
I think you beat the timeframe too, Madam Pallante. I think you beat the illumination of the red light.
Understanding there are many different views on substantive copyright law issues, do you think, Ms. Pallante, there is a general agreement on the importance of ensuring that the Office itself is properly resourced and modernized for the digital age?
Ms. PALLANTE. Well, Mr. Chairman, I haven’t heard anybody say stop looking into modernizing your operations and don’t bother going into the 21st century. So in answer to your question, I think copyright owners have legitimate concerns about our services, many of which were designed in the analog age, and I think the tech sector would like to see our database be more interoperable and authoritative so that they can also rely on it for their work in the chain of commerce.
Mr. COBLE. I thank you. Old habits die hard is why I put the question to you.
Do you have any business plans or credible estimates of what it would take to build a substantial 21st century digital Copyright Of-fice?
Ms. PALLANTE. I am afraid I don’t, in part because I think we have the same fee structure we have always had, which doesn’t— I would need to work with you and work with the Committee to figure out what portion of that should be fees and what portion of it should be appropriated dollars, because there are things that we can do that are reasonable, and there are things that we can do that are really incredible, and we may have to figure out what the goals are together.
I will say that when the electronic system was implemented in 2008, before my time, it was I think reasonably intertwined with the Library’s existing enterprise. I think that subsidy has made it difficult to figure out what our actual costs are. So, in other words, we share that with the entire Library as a cultural institution, and trying to figure out what portion of their budget is attributable to us is not something that has really been done. That kind of cross- accounting has not been done.
Mr. COBLE. I thank you for that. Yesterday, Madam Register, it was reported that Representative
Greg Walden criticized the FCC for having spent $352 million on
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IT over the last 5 years. How much have we spent on the Copy-right Office during the past 5 years, and how much do you think we have dedicated to the Office’s IT for consumers?
Ms. PALLANTE. We have a very, very miniscule budget for IT be-cause our IT department has 23 people in it, plus a number of con-tractors. It really is a liaison office to the Library. The Library’s IT budget is somewhere in the neighborhood of $60 to $100 million. You would have to ask the Library how that breaks down com-pletely.
So again, we don’t have a mature, independent IT structure in the Copyright Office. We have people who help to develop software modifications to existing programs.
Mr. COBLE. I thank you again, Madam Register, for your gen-erous words. I appreciate that very much. In fact, for the record, I think our Subcommittee has enjoyed a very excellent rapport with not only you but your immediate predecessor. Remember me to her, if you will, when you see her.
I am now pleased to recognize the gentleman from New York, Mr. Nadler.
Mr. NADLER. Thank you very much, Mr. Chairman. Madam Register, can you outline some of the steps that have
been taken to improve the copyright registration system in light of the fact that many businesses offer works by streaming or dis-playing them with an array of technologies?
Ms. PALLANTE. Yes. This is one of the issues I think that keeps the leadership of the Copyright Office up at night. We are dealing with multiple problems. We have an electronic interface for reg-istration, but that is based on the paper-based system. In other words, the paper system was transposed into an electronic inter-face. We have yet to go to the next generation of really having the real advantages of a 21st century digital system.
We also have a statute that was written in—well, enacted in 1976, written for 20 years prior to that, and it envisions a system of analog works. So it envisions a process whereby you send us works, we examine them, they are available for the Library’s collec-tion.
Mr. NADLER. Does that statute need to be revised to account for digital?
Ms. PALLANTE. I’m sorry? Mr. NADLER. Does that statute—did you just imply that you are
mandated to do things in analog and that we should revise that to allow for digital?
Ms. PALLANTE. I didn’t quite say that. What I said is that the statute did not anticipate the tensions that we have now that works are digital.
Mr. NADLER. Okay. I think you may have just answered part of the next question, which is what are some of the improvements that may be needed at the Copyright Office in the future?
Ms. PALLANTE. Yes. I think we really need to figure out, first and foremost, what we want the registration system to be. So we may not need the best possible quality of a work for purposes of exam-ining it and keeping it safe for litigation purposes. That ‘‘best copy’’ concept was designed for the Library of Congress so that it could
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preserve and have access to the best work available in the market-place.
The Library has separate provisions, like every national library in the world does, where it has the right to acquire copies of pub-lished works for the national collection. That is different than reg-istration copies.
What we have done in our copyright system, and it was done to protect copyright owners, or at least to relieve them of the burden of having to comply with dual systems, was say that if you register, we will use those copies for purposes of the provisions regarding the national collection.
I think where we are in the Copyright Office is do we now need to kind of step back and maybe segregate those provisions? So the registration system works for copyright owners and the public record, and the Library has very clear regulations and statutory in-struction about what it can and cannot acquire. And if it does ac-quire digital works—and I wanted to say for a moment that the Li-brary of Congress is an incredible cultural institution, and it has actually preserved works that copyright owners have failed to pre-serve over the years.
But assuming you want it to have access to digital works in the future, we do need to have safeguards because we are talking about copyrighted works.
Mr. NADLER. That was my next question. How will the Copyright Office be able to meet the challenge of enhancing the security of deposited digital works?
Ms. PALLANTE. We really need to apply our all-hands-on-deck on this question. Operationally, we share servers with the Library, and I don’t think we—well, I know——
Mr. NADLER. Is that a danger to the security? Ms. PALLANTE. I think so. Nothing insidious and terrible has
happened, but it is certainly a risk. Again, it goes back to—— Mr. NADLER. Should we consider severing your sharing that with
the Library, and would that be very costly? Ms. PALLANTE. I think optimally we should have separate servers
for the registration system than the Library has for its other busi-ness, yes.
Mr. NADLER. And do you have any—are we talking millions, bil-lions, thousands?
Ms. PALLANTE. Well, here is the question that I grapple with. What is the reasonable cost of a registration system if the copy-right owner and the public are getting the kind of return that they want? And if we are not charging $55 but we are charging——
Mr. NADLER. I’m sorry, you misunderstood my question. I am not asking about the value. What is the magnitude—what would it cost to give the Office a separate service from the Library?
Ms. PALLANTE. What would it cost as opposed to how to fund it you mean?
Mr. NADLER. Right. Ms. PALLANTE. I don’t know. Mr. NADLER. What magnitude are we talking about? Millions or
a billion? Do we have any idea?
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Ms. PALLANTE. At a very high level in terms of modernizing the Office, I think it is an investment of somewhere in the neighbor-hood of $150 million.
Mr. NADLER. Over a time period. Ms. PALLANTE. Of that, you could say half of that must come
from fees, do some public-private partnerships, be creative. Mr. NADLER. And my last question, since I have the orange light,
how has the registration program been hurt by budget cuts and early retirement packages?
Ms. PALLANTE. It has really been cut to the bone. We have huge vacancies, and we have the kind of staff that requires several years of training to get them to the point where they are applying the law and the regulations and the Compendium accurately so that courts and others can rely on it.
So they are really exhausted, and then they are dealing with an electronic system that sometimes crashes, doesn’t work all the time, and isn’t anywhere near the generation of services that copy-right owners want.
Mr. NADLER. So we are talking about both operating and capital costs there.
Ms. PALLANTE. Correct. Mr. NADLER. Thank you very much. Ms. PALLANTE. Thank you. Mr. NADLER. My time has expired, Mr. Chairman. Mr. COBLE. I thank the gentleman. The distinguished gentleman from Pennsylvania. Mr. MARINO. Thank you, Chairman. Good afternoon. The U.S. Copyright Office was created in 1897, I believe. Then,
music was written on paper, and recorded music was listened to on a phonograph, starting with wax records, so to speak.
Music creators and listeners use computers and mobile devices to create, distribute, purchase, and listen to music. So could you please tell me, would moving your Office into the 21st century cut down on unnecessary litigation, and how?
Ms. PALLANTE. Yes, sure. Our role, I think, in the 21st century is to have the most authoritative, accurate information about copy-right ownership and licensing terms available anywhere, globally. And if people can find that kind of information by clicking on a record and getting the licensing terms and being sent to a private registry, you begin to see how our role can really facilitate the li-censing marketplace.
Mr. MARINO. The Copyright Office is not an agency or even a sub-agency, and you do not report to the President; correct?
Ms. PALLANTE. Correct. I report to the Librarian of Congress. Mr. MARINO. Okay. How would your Office in the United States
be seen internationally if your Office were independent, its own en-tity?
Ms. PALLANTE. Well, I will say two things. In deference to all of the Registers who have come before me and all of the talents that they had, the Register position is recognized internationally. But we have this system with our own interagency process where we have people from PTO and elsewhere in the Administration really leading the international discussions on copyright law because of
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our unique situation in terms of where we are seated. So presum-ably we would have more authority and recognition if the position were different.
Mr. MARINO. Could you give me an example, could you give us an example of, if you need to do something in your Office, whether it is equipment-wise, whether it is rearranging more space, any-thing at all, what is the process you must go through?
Ms. PALLANTE. Well, again, we are a department of the Library of Congress like every other department in the Library of Congress. So for all of those kinds of infrastructure questions, they go through central Library practices and processes.
Mr. MARINO. With all due respect to my colleagues at the Library of Congress, which are fantastic because every time I need some-thing they are on it just like this, but you are a copyright lawyer?
Ms. PALLANTE. Yes. Mr. MARINO. An intellectual property lawyer? Ms. PALLANTE. Yes. Mr. MARINO. You are—I am making an assumption here—and I
think it is rather accurate. You are the expert over there, but yet you have to go through an unorthodox chain to even make your of-fice operate back in the 19th century standards; correct?
Ms. PALLANTE. Yes. Another way to look at that—I think about this a lot, as you might imagine—there is no position in the govern-ment like the Librarian of Congress. It would be a little bit like having the head of the Patent Office also run the Smithsonian In-stitution. Constitutionally, that is the situation that you have. And I would say for almost 120 years, it served the Nation fairly well.
What we are experiencing now is an explosion of the prominence of the copyright system. So I understand this to be about what is best going forward.
Mr. MARINO. Well, no matter where we go today, no matter where we go today, my kids, my mother, who is 82 years old, car-ries one of these and does all kinds of things on it, and you are still in a position where you are looking at documents.
So I am speaking on, I think, behalf of a lot of my colleagues. You need to be brought into the 21st century. You need to be an independent entity. You are part of the executive branch, and I think your job is so important and you have done such a fantastic job, as your predecessors have done, I think you should report to the President. With your ability and your foresight, I am sure you could take that Office into the 22nd century for us.
So, thank you, and I yield back. Ms. PALLANTE. Thank you, Mr. Marino. Mr. COBLE. I thank the gentleman. The distinguished gentleman from Michigan, Mr. Conyers. Mr. CONYERS. Thank you, Chairman Coble. We have appreciated you coming before us and explaining your
circumstances. Ms. Pallante, in your written testimony, you mention a 7 percent
decrease in the Office’s budget since 2010. What effect has that had on the ability of the Office to fulfill its duties, and are there other financial constraints that you believe are limiting the Office from running more effectively?
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Ms. PALLANTE. Thank you, Ranking Member Conyers. We imme-diately—one of the first things I experienced as Register right after my appointment was to do an early-out buy-out to move people into retirement, for people who were willing to do that, to reduce the staff.
I will say, that is not necessarily a terrible thing to go through because we have lot of people who worked for decades in the Li-brary of Congress and in the Copyright Office, and it creates the opportunity after those good years of service to rethink positions, digital positions instead of, say, cataloguers.
The problem is we can’t replace them because we don’t have the budget to fund them, and we are really, really small. I think we are smaller than we have ever been in modern times. The irony for us is that we are busier than we have ever been.
Mr. CONYERS. So creating a more aggravated problem. Well, since 2008, the Copyright Office has moved into an electronic reg-istration system. How has that worked out, and what needed im-provements might there be required?
Ms. PALLANTE. Yes, that was a big moment for the Copyright Of-fice. It wasn’t on my watch. I was still in New York in the private sector. But I think our issue is that we haven’t moved past it. That was a good foundational first-generation system. We haven’t gotten to recordation. That is still paper-based. And we haven’t made the registration system truly interoperable, meaning that we can’t nec-essarily have people send us deposits of their works because we can’t accept them because our system won’t handle them. We don’t connect through metadata to ASCAP or BMI or SoundExchange or other registries.
Mr. CONYERS. So what do they have to do? Ms. PALLANTE. We need to rethink the whole thing, drawing on
the tremendous expertise of the copyright community from here to California and back.
Mr. CONYERS. What has the Office done to rectify current issues with recordation, and what are the major concerns thereto?
Ms. PALLANTE. Okay. So we have done everything we can do without money. We ran numerous public processes, asking people what the system should look like in the future. We had dozens and dozens of meetings. We had three public hearings, one in New York, one in L.A., and one in Silicon Valley. We assigned to the first Abraham Kaminstein Scholar in Residence—which is a pro-gram we started based on one of the Registers who presided over the ’76 work leading up to that Act—the task of really thinking it through as a scholar, and he is finalizing his report. And now we have options, and the question is how to get to a strategic plan given budget cuts, but also the infrastructure that we have, and do you want to invest in it the way it stands currently.
Mr. CONYERS. Well, we know that you need help fast. What do you see is going to happen if you don’t get the funding that you need?
Ms. PALLANTE. Well, there is already a significant gap between our services and the way the copyright marketplace actually oper-ates, so obviously that gap will grow. I will also say, though, as kind of the head of the staff of the Office—this sounds like a weird term—we cannibalize our staff, right? The same people do every-
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thing. They register, but then they are writing a compendium that is 1,200 pages long. They are running trade negotiations with USTR, helping Congress, writing significant regulations, and we just aren’t big enough and we don’t have the depth of experience that we need.
Mr. CONYERS. Thank you very much for your candor. Ms. PALLANTE. Thank you, sir. Mr. CONYERS. Thank you, Mr. Chairman. I yield back. Mr. COBLE. I thank you, Mr. Conyers. The gentleman from California, the distinguished gentleman, Mr.
Issa. Mr. ISSA. Thank you, Mr. Chairman. Boy, I’ll tell you, hearings like this let us know how long it takes
to do anything here on Capitol Hill. Let me run through a couple of quick questions. I think the pub-
lic and all of us want to sort of make sure it is in the record. Currently, if I write a book, I can send two copies of the book
to you on paper, and you will take them, and then I have a copy-right; right?
Ms. PALLANTE. Correct. You have enhanced protection, in fact. Mr. ISSA. Yes, or I can do nothing and I have a copyright. Is that
right? Ms. PALLANTE. Correct. Mr. ISSA. What do you do with those two books? Ms. PALLANTE. We have a repository by regulation, or the Li-
brary has the ability to inspect and acquire those deposits and then use them under applicable law.
Mr. ISSA. Okay, which means—— Ms. PALLANTE. That is statutory. Mr. ISSA. Which means I can check out one of those two books
because it is my library, after all. Ms. PALLANTE. Yes. Mr. ISSA. Or all of our library. Ms. PALLANTE. The Library of Congress has arrangements with
other libraries and is the—— Mr. ISSA. So for a little over 100-and-some years, this has been
kind of how it works. You send your two books in, and Congress can get smarter, and you have the capability. There was a time when you had to send them in to have a copyright. Works that were not sent in simply enjoyed no copyright protection. When did that change?
Ms. PALLANTE. Yep, they went into the public domain. We moved to that system for international compliance purposes, or to become more internationally harmonized, with the ’76 Act. That was a sea change for the United States.
Mr. ISSA. So basically we took those things which people wanted to protect and turned it into everything is protected.
Ms. PALLANTE. That is one way to look at it, for sure. Mr. ISSA. And this is interesting because we did it in harmony
with the rest of the world that normally doesn’t respect these things very well. So, always interesting.
And you already stated that we haven’t come into the digital age particularly well because if I want to make sure that you have cop-
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ies of everything digitally, every day, every newspaper, et cetera, et cetera, you are not prepared to accept those.
Ms. PALLANTE. It is difficult. Mr. ISSA. Well, ‘‘it is difficult’’ is an interesting thing. We say
that a lot in Washington. If the Wall Street Journal and 400 other newspapers tried to send you, either on paper or digitally, one copy digitally, two copies on paper every day, you couldn’t handle them, could you?
Ms. PALLANTE. Well, we don’t handle them well. We accept them. We register them. But here is where we are going with our——
Mr. ISSA. Look, I saw Indiana Jones and the Raiders of the Lost Ark. They accepted the Ark, too, in that movie, and they have their best people working on it. [Laughter.]
Ms. PALLANTE. That’s right. Mr. ISSA. We are here today because you represent the most ar-
cane part of government in many ways. Ms. PALLANTE. Thank you. Mr. ISSA. We budget one part. We have you report to somebody
who, in fact, doesn’t really have the same mandate, while over at the Department of Commerce we have the primary oversight that we do, which is the Patent and Trademark Office.
Now, I am not going to put you on the spot, but hypothetically, if we harmonized the functions of the PTO and harmonized your functions in some acceptable way, wouldn’t that enhance the effi-ciency of dealing with digital and non-digital media, dealing with copyright, trademark, patent and, if you will, the potpourri if evolv-ing intellectual property?
Ms. PALLANTE. I think so, yes. Mr. ISSA. Wouldn’t it also harmonize or improve, assuming that
they all worked together, what happens when there is an alleged copyright violation and people want to get to justice? You don’t have administrative law judges, do you?
Ms. PALLANTE. No. Mr. ISSA. They do, don’t they? Ms. PALLANTE. We don’t have enforcement authority of any kind. Mr. ISSA. So we are dealing with 1897 thinking even after a 1976
enhancement which, by the way, there was an Internet then, it just wasn’t available to anybody in the public.
So just to wrap up, budget is always a problem, but you are not even beginning to be positioned to handle well the absorption, the cataloging, the referencing and the searching of the media being produced in the United States, let alone the rest of the world.
Ms. PALLANTE. I am afraid that is accurate. Mr. ISSA. And in a digital age, if we are going to protect copy-
right and we are going to make, if you will, works available to the public, both of those have to change.
Ms. PALLANTE. Yes. Mr. ISSA. Now, let me close with just one question because every-
one is talking about, well, maybe we ought to just move you to PTO. But let’s ask one question, because I think it is more complex than that.
Isn’t it true that the function of the Library of Congress to en-hance and make available for education and informational pur-
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poses to the United States and ultimately the world, that is a man-date that the Librarian has?
Ms. PALLANTE. Yes. Mr. ISSA. And yours is, of course, the protection. Don’t we have
to modernize both of them, the availability that the Librarian has and the systems for protection, including metadata that allows for searches? Aren’t those both things that have to be done on this Congress’ watch?
Ms. PALLANTE. Yes, I think that is an excellent way to state it and a very fair way to state it for the Library. They need to be a 21st century institution as well. They are a leader among cultural institutions.
Mr. ISSA. Thank you, Mr. Chairman. I think we have outlined some of the problem.
Mr. COBLE. I thank the gentleman from California. The distinguished gentle lady from California, Ms. Chu. Ms. CHU. Thank you, Mr. Chair. I think most people are surprised and perplexed when they learn
that our Nation’s Copyright Office is housed under the Library of Congress because your missions are very different. The Library is focused on preservation, while the Copyright Office is focused on recording and registering works and, most importantly, instituting legal and economic rights protections, and your technical needs are so different because the Library is that of preservation, whereas your Office functions like a 24-hour business that intersects with the global marketplace. And I have been astounded to learn of the implications of this.
First, you, the Register, are authorized to establish regulations, but such regulations are subject to approval by the Librarian, whose specialty is not copyright.
Secondly, you are able to collect fees, but you have no control over what happens with those fees. In fact, they are managed by the Library staff.
Thirdly, on security, the Copyright Office should be ensuring the security of works, including digital works, but the mission of the Library is to share works with the public.
And finally, there is the issue of the appointment and authority that you have. Similar positions such as yours, the Intellectual Property Enforcement Coordinator and the Executive Director of the Patent and Trademark Office, this is a presidential appoint-ment and you report to the President. They report to the President. But instead, your position is appointed by the Librarian and you report to the Librarian.
So can you talk about these specific challenges and how they im-pede your desire to make the Copyright Office thrive in a digital economy and support a modern copyright system?
Ms. PALLANTE. Yes. Thank you for those questions. I will say this. Everything that you set forth is true and was rel-
atively without incident for a long time, decades, didn’t cause any harm. I think, again, we are now seeing kind of growing pains and natural tensions between the Library as a library and the Copy-right Office as the copyright system of the United States.
So I do feel like we are at a point where there either have to be safeguards put in place within the current institution or you really
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need to think on this Committee about new paradigms, maybe some of the things that you were discussing earlier.
Interestingly, the IPEC was created recently, right? In 2008. And the Under Secretary in the mid-’90’s. Those positions intersect with the Register’s authority by statute, but you are correct that they are much higher elevated than the Register position is.
I think what you are really asking me is who is the head of the copyright system, and the truth is the Librarian of Congress is the head of the copyright system for purposes of the Constitution. The Register works under the general direction and supervision of the Librarian. So there are many duties in the Copyright Act that say ‘‘the Register shall,’’ but at the end of the day it is really your Li-brarian, all of your Librarians back to 1897, who have had respon-sibility for the system.
Ms. CHU. And so to be specific, I brought up the example of regu-lations that are written.
Ms. PALLANTE. Yes. Ms. CHU. These, and security of works. Could you—— Ms. PALLANTE. I don’t know if this is so different from agencies
outside of the IP space, but basically the expert in the agency and, in turn, my experts on my staff conduct rulemakings, prepare regu-lations. We work under the APA, by statute. The Library doesn’t. But I send them to the Librarian for signature, and he has to ap-prove them. So it really isn’t just a rubber stamp, and that is how it works.
There could potentially be a conflict in the future. We haven’t had that, really, to date. So I think, again, if we are talking about the future, that might be a better way to think about these issues.
For example, if the Register were to say I don’t think we should be accepting digital deposits without copy controls in the registra-tion system because it is a conflict for the statute and for the peo-ple registering, technically the Librarian has a right to say ‘‘that is what I want.’’
Ms. CHU. In fact, can you guarantee the security of digital works right now?
Ms. PALLANTE. No, because we don’t have—well, I can’t. I don’t have control of the IT system. My avenue for that is to make the case internally. And in defense of the Library of Congress IT de-partment, they are doing a lot of different things. We are not their only client or customer.
Ms. CHU. And what are the implications of not having control over your own fees?
Ms. PALLANTE. It is a legal question. People are paying us for services, and that money is routed through centralized IT systems. So on the one hand, you have synergies. On the other hand, you don’t have control of the product that you are delivering for those fees. So what stakeholders have said to me is that they—I mean, we are talking about some stakeholders who invest tens of millions of dollars in their copyrighted works. So a $55 fee is not a big deal for them, and I think if they were getting the kind of service that they want, and the security and confidence that they want, they would pay more, and I think our fees are too low for those kinds of copyright owners.
Ms. CHU. Thank you.
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I yield back. Mr. COBLE. I thank the gentle lady from California. The distinguished gentleman from North Carolina, Mr. Holding. Mr. HOLDING. Thank you, Mr. Chairman. Ms. Pallante, thank you for being here. I think either in your tes-
timony or in response to a question, we were talking about the Of-fice functioning as the principal advisor to Congress on copyright law and policy, both domestically and internationally. And you also have a duty as the Copyright Office to provide information assist-ance to other Federal departments and agencies and the Judiciary on copyright law.
So with all of the happening issues in copyright law, I was won-dering how many lawyers do you have assigned to these discrete tasks and what percentage of your work is this duty that you have to provide advice to us and others?
Ms. PALLANTE. It is a huge percentage of the work right now be-cause you have had 16 policy hearings in the last couple of years. We have 18 lawyers in the legal departments. A couple of people are actually lawyers and the heads of other departments. But the people doing the legal and policy work number about 18. That is not enough, and we have a particularly acute need for very experi-enced copyright lawyers who can run the kinds of significant public rulemakings and discussions and policy studies that we are respon-sible for.
We do everything. Regulations alone could keep that number of lawyers constantly engaged, and that doesn’t count getting on a plane and going to Vietnam to help the USTR negotiate a Pacific Rim trade agreement. It doesn’t include meetings at WIPO, where we are required to be. It doesn’t include thinking through the legal implications of the things you are asking me about, fee structures and technology. So, we don’t have enough people.
Mr. HOLDING. Right. Are you able to supplement that at all? Ms. PALLANTE. Again, we are really good at trying to do things
with no money. We have gotten really good at it in the last couple of years.
We created a couple of programs to supplement our staff with short-term costs, as opposed to long-term staffing costs. One is the Kaminstein Scholar in Residence that brought a scholar to us for a year. We will now try to get another scholar to come. That helps immensely because they are extremely capable and talented and quick and can do all the kinds of deep thinking that we need.
We created the Barbara Ringer Honors Program. We got hun-dreds of applications. We just a couple of weeks ago started our first two Ringer Fellows, one from New York and one from Chicago.
We created a Copyright Matters program to kind of bring people into the Office to help us think about marketplace issues. Chair-man Goodlatte has spoken at that. We have had artists. We have had presentations on fair use.
And finally, we created a research partnership with law schools, and our first success with that was Stanford Law School, where two classes in a row under the tutelage of Professor Paul Goldstein, who is a giant in the field, worked on some of our recordation chal-lenges.
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So we are trying every which way to bring in talent and support to supplement.
Mr. HOLDING. Right. Mr. Marino brought up the issue of pre-cisely where the Copyright Office sits in the structure of govern-ment and who it answers to ultimately. I was wondering, with the very important role that you play as an advisor to Congress and the other agencies on copyright law, is the stature of the Copyright Office within the structure of the government sufficient? Does it impact your leadership role as you are trying to foster our Amer-ican copyright system?
Ms. PALLANTE. Well, that is a big question. Again, I think over the decades, prior to this recent period that we are in, the Register was given a lot of deference. But you created two positions that now are intersecting in copyright policy in the past 20 years. One is the IPEC, and one is the Under Secretary for Commerce, which is the head of PTO. It is a complicated structure because the PTO’s statute says the head of the Patent Office must confer with the Register on copyright policy issues.
But I think what you are asking me is, is the head of the Copy-right Office at the upper echelons of the Federal Government in the Administration like these other positions?
Mr. HOLDING. Yes. Ms. PALLANTE. The answer is clearly no. Mr. HOLDING. Do you have a seat at every table that you want
to sit at to influence policy? Ms. PALLANTE. And many stakeholders have said that to us, and
we don’t take it personally, but the answer, of course, is we are not. Mr. HOLDING. And how does that inhibit you carrying out the re-
sponsibilities that you think Congress has vested you with? Ms. PALLANTE. I think we are not in the room all the time, right?
We are not leading the delegations as the substantive agency. We are not necessarily in all of the discussions of the Administration. We are a little bit confused about which branch of government we are in following this IBS-CRB case that came down and said all of our functions are executive branch.
So I think it is a complicated structure, and to be fair to my staff, I think people make it work at the staff level across this inter-agency process, but nobody really understands it.
Mr. HOLDING. And if, indeed, which I think you are part of the congressional branch, the legislative branch, whether or not there is a fiduciary responsibility or not, we have that. But perhaps we in the legislative branch are not being adequately represented be-cause of your exclusion from some of these tables where policy is being made.
Ms. PALLANTE. It is a fair point. Mr. HOLDING. Thank you. Thank you, Mr. Chairman. Mr. COBLE. I thank the gentleman from North Carolina. The distinguished gentleman from New York, Mr. Jeffries, is rec-
ognized for 5 minutes. Mr. JEFFRIES. Thank you, Mr. Chairman. And thank you, Ms. Pallante, for your presence here today, as
well as for your leadership.
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I think I want to pick up where my colleague left off and ask you about the recent IBS v. Copyright Royalty Board case. I believe you are familiar with the case. You referenced it in your written testi-mony; correct?
Ms. PALLANTE. Correct. Mr. JEFFRIES. And the case involved a decision by the D.C. Cir-
cuit, I believe, that held that in promulgating copyright regula-tions, setting rates and terms, the Library of Congress is undoubt-edly a component of the executive branch. Is that correct?
Ms. PALLANTE. That is what the case says. Mr. JEFFRIES. Now, it was already a complicated mix related to
your structure, as discussed during this hearing. How does this de-cision impact what was already a complicated situation? How do you interpret the decision, and what guidance can you provide to us as to how we should interpret the decision and what it means in terms of how we move forward?
Ms. PALLANTE. Thank you. I think it is a fairly significant deci-sion. On the one hand, it confirms that the Library of Congress is like no other agency in the Federal Government in that it is clearly a hybrid agency. You have the copyright functions, clearly in the court’s opinion, being executive branch in nature; and then you have, for example, the Congressional Research Service, which can only be legislative, in the same agency. As I said earlier, I think you have this position where the Librarian of Congress has really kind of an incredibly Herculean job where you are running Library functions, legislative functions, and then also executive branch copyright functions.
You are right that these issues are not new. One of the things that is very interesting to me is that from 1802 to 1897, the Librar-ian of Congress was not a Senate-confirmed position. It was when Congress in 1897 formalized the copyright system within the Li-brary that Congress—and it is very interesting to go back and read this, speaking about constitutional issues that have now popped up again—said these issues must be constitutionally correct. They must flow constitutionally so that the Librarian of Congress must be Senate confirmed. The copyright system affects the legal rights, economic interest of those who rely on it.
Mr. JEFFRIES. Right. Well, the copyright system, in fact, or Con-gress’ power to legislate copyright and intellectual property indeed stems from Article 1, Section 8, Clause 8, the United States Con-stitution, which is, I gather, why the Judiciary Committee has ju-risdiction over this very important area of law.
Now, you mentioned in your testimony that the agency finds itself in a situation where copyright issues have become increas-ingly complex, and at the same time our resources have become in-creasingly strained, a very difficult situation to be in. Could you clarify what has increased the complexity of the copyright land-scape?
Ms. PALLANTE. Well, the digital revolution has made it more complex. And so where people used to, in the chain of commerce, work with analog physical items, CDs and books and DVDs, they are now getting their content on mobile devices and digital plat-forms. So copies may not be involved.
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It may or may not be a generational thing as well. I happen to have teenagers. They don’t want to own anything. They just want access to it. So it is this real focus on display and access and streaming, making the public performance right arguably more im-portant in the future than the reproduction rights and distribution rights have ever been. So we have all of that coming into the mix.
Then that requires us in our registration system to also make those shifts. How do we examine a work that is really only made available to the public through streaming?
Mr. JEFFRIES. Given the increased complexity as you have laid out, and I think in a manner that is shared by a significant num-ber of people in this institution, clearly in my view that suggests that we have got to look at providing the agency with the resources needed to deal with an increasingly complex landscape.
But does the complexity also suggest, in your view, that it is rea-sonable for us to take a hard look at what an appropriate structure would be in the 21st century?
Ms. PALLANTE. I think you have to, and I appreciate the ques-tion. I will say it this way. A 21st century legal framework requires a 21st century agency, and the structure, the budget, the IT, the principal duties, the stature, all of those come into play as you look at the question, I think.
Mr. JEFFRIES. Thank you very much. I yield back. Ms. PALLANTE. Thank you. Mr. MARINO [presiding]. Thank you. The Chair now recognizes the congresswoman from California,
Ms. Lofgren. Ms. LOFGREN. Thank you, Mr. Chairman. And thank you, Madam Register. It is good to see you. Ms. PALLANTE. Thank you. Ms. LOFGREN. As we are enmeshed in this sixth tri-annual re-
view, it just reminds me of Congress’ obligation to reform Section 1201 to prohibit not only infringing action and to not tie up inno-cent use. I think in a way we have had an opportunity to do—‘‘ex-periment’’ isn’t the right word, but to see what happens when le-gitimate content is offered and pirated content is available. The public goes to the lawful content. I mean, there are always some outliers, but in overwhelming numbers that is what the public wants to do, and I think that is something we didn’t know for sure, but I think it is a very welcome discovery.
I think we have also seen that when we don’t too tightly tighten up the circumvention, we promote innovation. You take a look at the app market, for example. It has just exploded in terms of cre-ativity when we have not tamped down, as you could have using section 1201.
So I think it is certainly not your responsibility. It is our respon-sibility to make sure we go after infringement, but that we do not squash technological innovation that has nothing to do with in-fringement.
It is like a broken record. I have been saying that for more than a decade. But it is time for us really to do that, and I think the facts and the developments prove that we don’t have to be afraid of doing that.
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Just a couple of quick questions. In the Notice of Inquiry that your office released yesterday, I was surprised honestly to see the intent to require separate petitions for each type of wireless device—tablets versus readers versus hotspots versus smart watches—and even a distinction between different kinds of wireless and connected e-readers and tablets. It strikes me that this is wrong.
Now, by dividing or subdividing wireless devices into different categories, it seems the government would be protecting not copy-righted work but business models, and that is not our job. Our job is to provide protection to material that is protected under copy-right. It is not to pick winners and losers among business models. So I have a deep concern about that. There was a huge uproar, as we know, about the ruling last year on not unlocking cell phones. The Committee has even addressed that, although not as success-fully I think as we had hoped. I think we are getting potentially into a much bigger uproar if we go into distinctions between dif-ferent kinds of readers and the like.
Then the second question—and you can answer them both to-gether—the timeline given in yesterday’s notice I think needs re-view. You mentioned the role of law schools and law clinics, and I think it is a good sign, actually, and Stanford is not in my district but it is 10 minutes out, and it is a great group of young students.
The timeline as published in the notice has everything due at Christmas, and the law clinics that are heavily supported by stu-dents are going to be adversely impacted by that timeframe, and I am wondering if we couldn’t revisit that because the students, ei-ther they are not going to have a break or they won’t be around or it is going to be an insane type of workload that we are putting on them. It is 45 days after the notice of rulemaking. I think we need to revisit that, and I would welcome your comments on both of those questions.
Ms. PALLANTE. Yes, sure. Thank you. I would just say on the last question, we frequently extend deadlines once we publish them, usually when a few stakeholders call and say what you just said. The timeline was orchestrated working backwards from when it is due.
Ms. LOFGREN. I understand. But if I could, on that point—— Ms. PALLANTE. Sure. Ms. LOFGREN [continuing]. From the students’ point of view,
knowing there is an extension later isn’t going to help them. Ms. PALLANTE. Yes. No, I understand. Ms. LOFGREN. They need to go to the max doing all-nighters
while their exams are due, unless they know it is going to be ex-tended.
Ms. PALLANTE. And we obviously want fresh, young, talented stu-dents participating. I hear your point. So I will talk to my General Counsel’s Office and we will look at the timeline.
On the first point, it is interesting. We spent a lot of time talking to everybody who has participated in this proceeding over the past decade, and consulted with the Administration about how to do it better than it has been done before, and a number of changes were made with that in mind.
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The subdividing of the different categories was intended to create a better record because the lack of a good record was our problem in the last round, and we were trying to get people to focus on what the evidentiary standards would have to be. So it doesn’t nec-essarily preclude us from finding that there are multiple devices and categories that will have like treatment in the end. But the in-tent was to do something to improve the situation, not to make it harder.
Ms. LOFGREN. I guess I don’t understand that, and perhaps you can fill in later with me. But if you take a look on page 55689, it talks about petition proposing a general exemption for all wireless devices or all tablets. It is difficult to support, in contrast with tab-let computers, e-book readers. It just seems to me that from a Sil-icon Valley point of view, that doesn’t make any sense at all to me.
Ms. PALLANTE. I could see how it wouldn’t make sense from a technology perspective. We have this factor in the statute that re-quires us to look at actual markets, not giant markets but par-ticular markets. So to your more general point, the 1201 rule-making is from 1998, and we are trying to fit it into——
Ms. LOFGREN. I understand that. I love Bob Kastenmeier when he wrote the Act in ’76, he didn’t have to deal with some of these issues. But the fact is, in terms of markets, whether I have my Kindle, whether I have my iPad with my Kindle app, whether I have my Kindle app on my phone or my Galaxy phone, it really doesn’t matter.
Mr. COBLE [presiding]. The gentle lady’s time has expired. Ms. LOFGREN. Thank you, Mr. Chairman. I would like—I would
hope that we could follow up with this because we are likely going to have the same ugly explosion and public outcry that we had last year on phone unlocking. It would be nice to avoid that.
Mr. COBLE. I thank the gentle lady. This concludes today’s hearing. I want to thank the Register again for having served as our only
witness today. We appreciate it very much. I want to thank those of you in the audience. Your presence indi-
cates that you have more than a casual interest in this matter, and I thank you all for having attended as well.
Without objection, all Members will have 5 legislative days to submit additional written questions for the witnesses or additional materials for the record.
This hearing stands adjourned. [Whereupon, at 3:27 p.m., the Subcommittee was adjourned.]
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